London - Even children who believe in Santa understand that his generosity does not, sadly, extend to grown-ups. Adults have to find the money in the first place – and they are the ones who say “yes” or, in these straitened times, often “no”.
But some families are finding that the necessity of managing Christmas on a tight budget presents an opportunity. It means they are talking to their children more candidly about money, explaining where it comes from, where it goes – and why it doesn’t buy as many stocking-fillers as in previous years.
We look at ways you can help your children understand more about money.
LEARNING ABOUT THE COST OF LIVING
Lloyds says weekly pocket money for children aged between eight and 15 fell almost five percent last year to £5.98. Three-quarters of children in this age group receive regular pocket money, with two in three saving 25p in each £1.
Child psychologists say it is important for children to understand the cost of what they want and relate it to their income, whether in the form of gifts, pocket money or payment for chores.
Christmas is a good time to drive this point home as most children have clear wish-lists of presents they want.
Dr Elizabeth Kilbey, a child psychologist, has this advice for parents of children aged between eight and 11: “It’s your role to help them realise the value of what they want. Instead of getting them the latest Xbox game, tell them to find out how much it costs. Then you can sit with them to work out how they will afford it. Rather than the pressure being on you to find the money, your child becomes responsible.”
The year has brought changes in the way we shop: a big rise in online shopping vouchers; the growth of cashless payment via mobile phones; and Visa cards for the under-tens. Many of these are aimed explicitly at youngsters, posing both challenges and the chance to learn.
TRADITIONAL SAVINGS ACCOUNTS
Like birthdays, Christmas is traditionally a time when youngsters receive cash from grandparents and other relatives. But where to put it? There are savings accounts for children but, as elsewhere, interest rates can be pitiful.
Charlotte Nelson of data collector Moneyfacts says choosing a savings account offers a good opportunity to talk to children about returns and notice periods. “Some children’s accounts allow you the flexibility to dip in and out of the savings, but the best interest rate accounts tend to restrict access,” she says. “Talk to your child about what they think will be best and use the internet to find which account suits you.”
VIRTUAL POCKET MONEY WEBSITES
Websites such as Roosterbank let youngsters handle and save “virtual” pocket money with budgeting games linked to an online piggybank. They can keep an eye on their money and, with the permission (and real money) of their parents, spend it on real goods via online stores linked to the website.
Adults can “pay” children for chores, or as rewards for achievements. As Christmas heaps pressure to spend on both parents and children, tools like this can come into their own.
Lucinda Collison, 45, of Cambridge, started using the site in July for her three children, Mungo, eight, Atalanta, seven, and five-year-old Cosmo. She says: “We never bothered with pocket money before – just a few pennies to spend on sweets.”
By offering each child £3 a week for a few basic chores, such as tidying their bedroom, and punishments of not paying if they behave badly, such as swearing, they can learn to appreciate the value of money.
Lucinda, a fundraiser whose husband Christopher, 50, is an IT manager, says for good behaviour virtual points are credited into a child’s web account – to be swapped for real cash later on. The online balance sheet can be viewed by children and parents at roosterbank.com.
The website makes its money by taking a cut from any pocket money purchases made on a link to online shop Amazon, though users pay the same as other Amazon customers.
It also has a games area offering activities, including maths challenges, where separate virtual “rooster” points can be earned and used to purchase virtual pets.
Lucinda says: “Mungo had never saved but last month turned round and said he wanted to buy a £27 computer game with his pocket money. He understood the value as it took more than two months to save up – and I gave my permission.”
Roosterbank chief executive Ben Edwards believes that the idea of putting pocket money into a piggy bank every week can seem dated, but not with online budgeting.
“Parents keep hold of the purse strings and it is up to them if they adopt a carrot-and-stick approach to pocket money,” he says.
“We only offer the tools. But for kids to get a proper understanding of savings they should earn their pocket money.”
FAMILY CASE STUDY: WE MAKE THE CHILDREN EARN THEIR MONEY SO THEY RESPECT IT
Despite school projects, books and online games and exercises, the best way children can learn about money is from their parents.
That is the view of Jaqi Whittaker, who lives in Wandsworth, south-west London, with her husband, Philip, 40, a management consultant, and their four children, Finn, 13, Megan, 12, Joseph, nine, and Poppy, three.
Rather than hand out regular pocket money, she prefers to offer rewards for household tasks – keeping a note of any savings in the back of her diary and paying out later on.
Jaqi, 43, says less formal processes hadn’t worked. “We tried pocket money but occasionally forgot to pay and sometimes the cash simply got lost,” she says. “Now the children understand that earning through household tasks, such as washing the car or motor scooter, can be rewarded in cash.”
She says for now only Finn and Megan have a strong enough concept of value to be trusted to go on a Christmas shopping spree. Jaqi gives them £15 for presents for each grandparent, aunt and uncle. They must choose gifts within the budget – something they enjoy, Jaqi says – and then return unused money.
“Trust is a vital part of the arrangement – the children refer to it as dealing with the Bank of Mum,” she says.
“If the children want to buy a computer game, it is fine as long as they have earned it. Knowing children have chosen the Christmas gifts means they are worth much more.” - Daily Mail